The Victorian Coroner has ordered an inquest into the gangland killings of police informer Terence Hodson and his wife Christine.

The Hodsons were shot dead at their Kew home in May 2004 at the height of Melbourne's gangland wars, when Hodson was due to give evidence against disgraced detective Paul Dale.

He was charged with the murder of Terence Hodson.

A hit man, who cannot be named, was also charged over the double murder.

The charges against both men were dropped after convicted killer Carl Williams, who had incriminated them, was killed in jail in 2010.

Mr Dale has always maintained his innocence.

The inquest will concentrate on who killed the couple and the protection they were given immediately before their deaths.

Hodson was 'mismanaged' by police handlers

Hodson family lawyer Alex Lewenberg says they are relieved there will be an inquest.

"They've waited four and a half years to get there and I'm very pleased for them," he said.

"It took a long time for common sense to prevail."

In their submission, the Hodsons' daughters argued their father was mismanaged by his handlers, which meant many in the criminal world knew he was an informer.

They said he should have been given greater protection as a result, especially after agreeing to give evidence against Mr Dale.

Mr Dale's lawyer said the inquest should not be limited to the former drug squad detective's potential involvement in the case.

'A lot of questions left unanswered'

Acting Police Chief Commissioner Graham Ashton says it is not a closed case.

"It's left a lot of questions unanswered, that crime," he said.

"We're still actively investigating as much as we can, and any new information will be actively and vigorously looked at.

"We certainly hope that a coroner's inquest will do much to provide some more certainty, particularly for the community, in understanding what happened in that terrible crime and exactly why it occurred."

In August, Police Chief Commissioner Ken Lay said Mr Dale was still a suspect.